Crypto Locked in DeFi Nearing $200 Billion

In May, the total value locked (TVL) in decentralized finance (DeFi) applications soared to $192 billion, marking the highest level since February 2022, as per a DappRadar report.

However, the rise in TVL contrasted with a 21% decline in the number of unique active wallets (UAW) engaging with DeFi.

The surge in TVL was driven by a 17% increase in the U.S. dollar value of cryptocurrencies within DeFi applications, bolstered by rising prices of Ether and other tokens.

Ethereum led the DeFi scene, accounting for $130 billion, or 68% of the overall TVL, while Solana followed with a TVL of $10.9 billion, representing 5.7% of the total.

Solana's DeFi TVL saw a 14% increase from the previous month.

Despite this positive growth in value, the daily UAW count in DeFi dropped, suggesting that while the existing user base is either depositing more funds or benefiting from increased portfolio values, it is also becoming smaller.

The UAW count fell to 1.75 million for the month, which constitutes 17% of the total UAW across all Web3 applications.

DappRadar linked the increase in TVL to speculative trading in anticipation of an Ethereum exchange-traded fund, noting, “The DeFi UAW was down, meaning that most trading was speculative based on ETH ETF.”

Data from DefiLlama reveals that from October 1, 2023, to June 7, 2024, the 24-hour trade volumes on decentralized exchanges climbed from $1.7 billion to $5.1 billion.

This spike likely provided higher returns for liquidity providers and lenders, encouraging more deposits into DeFi applications during a period marked by intense discussions around Bitcoin and Ether exchange-traded funds.

Despite a decrease in UAW within the DeFi sector, other Web3 sectors experienced user growth, according to the report.

The gaming sector saw its active user base increase by 7.5% to over 3 million.

Nonfungible token (NFT) marketplace users grew by 11% to 1.52 million UAW, and Web3 social media apps saw a 29% rise to 1.92 million UAW.

As of June 6, the total Web3 UAW reached 10.4 million.

An April report noted that UAW had risen to 7 million in Q1 2024, up from 4.3 million in 2023, indicating a consistent upward trend in Web3 application usage.

However, some experts contend that the industry's growth could be hindered by the ongoing complexity of user onboarding.

Sources:

https://cointelegraph.com/news/defi-tvl-192-billion-first-time-15-months-dappradar

https://dappradar.com/blog/defi-tvl-hits-192b-with-best-performance-since-february-2022

https://defillama.com/?volume=true&aggregators=true&tvl=false